International Journal of Business and Social Research

Volume 06, Issue 02, 2016

Prediction of Consumer Behavior Regarding Purchasing

Remanufactured Products: A Logistics Regression Model

Kadri G Yilmaz1, Sedat Belbag2

ABSTRACT
Scarce resources, strict take-back legislations, decreasing life cycle of products and increasing
competition are compelled original equipment manufacturers (OEMs) to collect and reuse their
returned products. Remanufacturing is a well-known and widely used environment-friendly
manufacturing to evaluate product returns. Moreover, with remanufacturing, OEMs offer
environment-friendly products to environmentally concerned consumers, also known as green
consumer. This study aims to develop a prediction model to determine purchase behavior of
consumer for remanufactured products. We investigate the data with a survey of closed-end
questions conducted among 400 residents of Ankara, Turkey. We consider several factors that
influence consumers’ preferences in purchasing process of remanufactured products. The suggested
model predicts consumer behavior of remanufactured products with logistic regression analysis. The
results show that several factors have effects on purchase behavior of consumer for remanufactured
products such as low prices, company reliability and product promotion changes consumer behavior
from no purchasing to purchasing remanufactured products.

Keywords: Consumer behavior, green marketing, logistics regression, remanufacturing, societal marketing.
Available Online: 25-02-2016
This is an open access article under Creative Commons Attribution 4.0 License, 2016.

1.0 INTRODUCTION

Recently, environmental issues and waste management have increasingly become important over
customer concerns. According to 2012 Commodity Flow Survey, $83,153 million worth of waste and scraps
are returned in the United States (United States Department of Transportaiton). These waste and scraps
generally originate from defective or damaged products, leased product returns, and end-of-life returns

1 Business Administration, Faculty of Economics and Administrative Sciences, Gazi University. Turkey. Email id:
kgokhany@gmail.com
2
Business Administration, Faculty of Economics and Administrative Sciences, Gazi University. Turkey. Email id:
sedatbelbag@gazi.edu.tr

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(Jayaraman and Luo, 2007; Toffel, 2003). The decreased life cycle of products boosted the number of
returned products in the last decades. Moreover, strict take-back legislations compel original equipment
manufacturers (OEMs) to collect returned products from customers. Additional collection and disposal
operations of returned products have led to increased transportation and disposal costs. Thus, in order
to eliminate product returns and additional costs, OEMs aim to change their traditional supply chains to
closed loop supply chains.

Closed loop supply chains intend to design, operate and control the supply chain system in consideration
of different types and volumes of returned product over the entire life cycle of a product (Govindan et
al., 2015). Moreover, closed loop supply chains involve different operations from traditional supply
chains, such as repairing, remanufacturing, recycling, and disposal. Among these alternatives,
remanufacturing is the most widely used form of environment-friendly manufacturing. Remanufacturing
is a potential income option through regaining materials from returned products. Hence,
remanufacturing is effectively implemented in many industries, such as automotive, aviation and
electronics. For instance, Kodak enjoys significant cost advantages from remanufacturing of single-use
cameras - up to $9 million per year (Chengalur, 2005). Caterpillar is another example, where two different
diesel engines with 20,000 parts are disassembled and rebuild, from bottom to top, per eight-hour shifts.
With 14 different remanufacturing plants, Caterpillar's annual revenue reaches $1 billion, with 20% annual
growth (Jayaraman and Luo, 2007).

Despite requiring additional efforts, the remanufacturing process also provides competitive advantages
over competitors. Remanufacturing offers several marketing opportunities to companies such as
reaching green consumers and entering new environmental concerning markets. Increased
environmental consciousness of consumers reshapes their consumption patterns (Shrum et al., 1995),
which – all together –contributes to popularization of concepts, such as remanufactured products and
green marketing, as well as promoting conscious utilization of resources (natural resources, energy, etc.)
(Atasu et al., 2008; Geyer et al., 2007; Giutini and Gaudette, 2003). Green marketing is a concept based
on environmental consciousness and analyzed in many studies (Oyewole, 2001; Chamorro et al., 2009;
Prothero, 1990; Ginsberg and Bloom, 2004; Peattie, 2001; Polonsky, 1994; Peattie and Charter, 2003;
Polonsky and Rosenberger, 2001; Roberts, 1996; Prakash, 2002; Ottman et al. 2006; Rex and Baumann,
2007; Liu et al., 2012; Dief and Font, 2010; Iraldo et al., 2013; Biswas and Roy, 2015).

The evolution of marketing and the modeling of green marketing is parallel by process. Evolving through
the concepts of production, product, sales, modern marketing and societal marketing (Kotler and
Amstrong, 2008; Kotler and Keller 2012; Hutton, 1996), marketing has reached its final phase where the
focus is on the society and social welfare as well as the consumer. Nowadays, social responsibility
awareness is a strong aspect for businesses to improve their image in the eyes of the consumers. Thus,
companies adopt a marketing approach beyond customer-oriented approach where the focus is on every
segment of the society. The attached importance to the benefit of the society as a whole as well as the
efforts for efficient use of limited resources are important topics shaping marketing strategies of
contemporary businesses (Peattie and Peattie, 2009; Gaski, 1985; Prothero, 1990; Carrigan, 1995; Dos
Santos, 2009; King et al., 2000).

Figure 1: Societal marketing concept

Source: (Kotler and Amstrong, 2008)

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The social interest in green marketing encourage companies to produce environmental-friendly products
such as remanufactured products. Remanufactured products have same functions as new traditional
products and positive effects on the environment. These products provide both a private benefit to
customer and a public benefit to society. On the other hand, the evaluation of consumer behavior about
remanufactured products forms several questions for companies to answer in marketing process. For
example, what are the key factors that affect consumer behavior or how can consumer behavior be
predicted with regard to remanufactured products?

The contribution of this paper is to predict consumer behavior regarding purchasing remanufactured
products. We reveal and underline several factors that affect the prediction process of consumer
behavior for remanufactured products. We use logistics regression method to predict consumer
behavior according to the related factors for remanufactured products. The results show that the
suggested model predicts consumer behavior with considering several important factors such as low
price, information on previous condition and promotion.

The remainder of the paper is organized as follows. Section 2 outline the review of the relevant literature.
Section 3 provides the research method and the scope of the study. Section 4 presents the results of the
logistics regression model. Lastly, Section 5 concludes the study with presenting a discussion of the study
as well as suggestions for future studies.

2.0 LITERATURE REVIEW

Environmentally concerned customers have led to an expanding market that emerged with respect to
environment-friendly (green) products. Recycled products, organic products, energy-saved electronics
and remanufactured products are some major examples of environment-friendly products.
Remanufacturing aims to produce environment-friendly products, however, consumers’ perception of
remanufactured products is a rarely studied topic in literature. Early studies intend to shed light on
consumer perception of recycling as well as recycled products. Mobley et al. (1995) examine consumer
approach to recycled products as well as effective factors in the evaluation process of consumers. Their
study suggests that, in consumers’ opinion recycled products are not evaluated as new products.
However, in consumer evaluation process a respected brand may have a positive influence over recycled
products. Biswas et al. (2000) analyze the relation between past recycling behavior and consumer
attitude toward recycled products. Accordingly, companies should develop recycled product related
messages to affect social marketers as well as promoting consumption of recycled products. Several
studies focus on topics related with used products in marketing area. Some examples are the connection
between used and new product markets (Thomas, 2003), consumer behavior in used products trade
(Hickey and Fitzpatrick, 2008), the pricing issue of used products (Brough and Isaac, 2012).

More recent studies aim to illustrate the importance of consumer perception of remanufactured
products. Michaud and Llerena (2011) investigate consumers’ willingness to pay (WTP) for
remanufactured products by using experimental auctions. They concluded that a large number of
consumers assume remanufactured products to have a lower quality level than that of new products.
However, OEMs can reverse this perception by offering quality assurance. Price and quality are
considered as key factors to affect purchase decision, especially among environmental conscious
consumers. According to Atasu et al. (2008), a large number of consumers usually approach
remanufactured products as low-price alternatives to new products. Subramanian and Subramanyam
(2012) focus on explanatory factors of the purchase price differences between new and remanufactured
products. They conclude that reputation and identity of seller as well as their warranty strength have
positive influence on remanufactured products. Hazen et al. (2012) investigate the significance of
ambiguity tolerance, perceived quality, and willingness to pay, regarding remanufactured products. The
results illustrate that ambiguity has an adverse effect on consumers’ perception of quality as well as their
willingness to pay for remanufactured products. Hamzaoui Essoussi and Linton (2010), point out the
impact of perceived functional risk related to consumer purchase decisions. As the uncertainty increase

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the perceived functional risk, the remanufactured product will become economically less attractive to
customers. Jiménez -Parra et al. (2014) stated the key factors behind the potential consumer behavior as
social circles, price and remanufacturer's reputation.

In summary, although some studies present several factors that have a potential to affect consumer
behavior for remanufactured products, none of them investigate the prediction of purchase behavior of
consumer for remanufactured products in the literature. On the other hand, this study aims to design a
model that predicts purchase behavior of consumer for remanufactured products with respect to factors
that influence consumers’ preferences to purchase remanufactured products.

3.0 RESEARCH METHOD

We collect the data utilized in this study, with a survey of closed-end questions conducted among
residents of Ankara province. The questionnaire is designed to project purchase behavior of consumer
for remanufactured products. We carried out the questionnaire among 400 participants, and random
sampling is used. In the questionnaire statements are presented with five point Likert scale (1: Strongly
Disagree, 2: Disagree, 3: Neutral, 4: Agree, 5: Strongly Agree). Prior to the survey, we conduct a
preliminary survey among 100 participants selected with random sampling. The reliability analysis carries
out after the preliminary survey pointed to Cronbach Alfa value to be 84.1% (Table 1). Besides, a
correlation analysis check any possible correlation between the independent variables used in the
analysis. Thus, the result of the correlation analysis retrieve no meaningful relation between the
independent variables (Table 1). The variables listed in Table 2 are: Low prices (LOWP), warranty
disclaimer (WDIS), brand image (BRIM), perceived quality (PERQ), the product being used (UPRO),
information on previous condition (PCON), performance expectations (PEXP), product type (TYPE),
remanufactured product making less harm to the environment (LEHA), company reliability (CREL),
societal perspective on the product (SPER), product promotion (PROM) and background of problems
with the product (BPRO).

Table 1: Reliability statistics

Cronbach's Alpha Based on Number of
Cronbach's Alpha
Standardized Items Items
.841 .843 13

We develop our hypotheses with regard to factors that affect the prediction of consumer behavior for
remanufactured products. The hypotheses mostly depend on predict value of the factors. Acceptance
and rejection of any hypothesis belongs to significance value of the factor in the result of logistics
regression.

H1: Low price affects the prediction consumer behavior when purchasing remanufactured products.
H2: Warranty disclaimer affects the prediction consumer behavior when purchasing remanufactured
products.
H3: Brand image affects the prediction consumer behavior when purchasing remanufactured products.
H4: Perceived quality affects the prediction consumer behavior when purchasing remanufactured
products.
H5: The product being used affects the prediction consumer behavior when purchasing remanufactured
products.
H6: Information on previous condition affects the prediction consumer behavior when purchasing
remanufactured products.
H7: Performance expectations affects the prediction consumer behavior when purchasing
remanufactured products.
H8: Product type affects the prediction consumer behavior when purchasing remanufactured products.
H9: Remanufactured product making less harm to the environment affects the prediction consumer
behavior when purchasing remanufactured products.

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H10: Company reliability affects the prediction consumer behavior when purchasing remanufactured
products.
H11: Societal perspective on the product affects the prediction consumer behavior when purchasing
remanufactured products.
H12: Product promotion affects the prediction consumer behavior when purchasing remanufactured
products.
H13: Background of problems with the product affects the prediction consumer behavior when
purchasing remanufactured products.

Table 2: Inter-item correlation matrix

LOWP WDIS BRIM PERQ UPRO PCON PEXP TYPE LEHA CREL SPER PROM BPRO
LOWP 1.000
WDIS .606 1.000
BRIM .499 .539 1.000
PERQ .605 .561 .527 1.000
UPRO -.063 .073 .005 .202 1.000
PCON .166 .250 .198 .420 .263 1.000
PEXP .365 .319 .298 .480 .077 .599 1.000
TYPE .273 .421 .296 .471 .073 .371 .413 1.000
LEHA .353 .301 .189 .433 .215 .124 .296 .320 1.000
CREL .342 .423 .376 .501 .079 .352 .425 .555 .482 1.000
SPER .129 .057 .210 .197 .064 .063 .230 .140 .318 .265 1.000
PROM .485 .416 .239 .445 -.006 .262 .228 .308 .360 .446 .239 1.000
BPRO .059 .125 .031 .127 .118 .352 .467 .225 .190 .374 .178 .340 1.000

Logistic regression is a multivariate regression and permits an analysis where several independent
variables forecast a dependent variable in the presence or absence of an outcome based on the values
of a set of predictor variables. The main advantage of logistic regression is the usability with each type of
variable. For example, variables may be either continuous or discrete, or any combination of both types
and there is no need a necessity to have normal distributions (Lee, 2005). By nature, logistics regression
analysis is not affected by dependent and independent variables being qualitative, quantitative or
categorical. Therefore, logistics regression is beneficial to the researches for the interpretation of binary
and categorical data, especially (Agresti, 1996).

In this study, we utilize a logistics regression method to predict purchase behavior of consumer for
remanufactured products. Because, the dependent and independent variables are qualitative, we use
logistics regression analysis. Moreover, logistics regression analysis identifies the relation between
purchase behavior of consumer for remanufactured products and the factors that influence consumers’
preferences to purchase these remanufactured products. The dependent variable is analyzed with
respect to the 13 independent variables presented in Table 2. The logistics regression analysis assigns the
value “0” to the “yes” answers provided to the independent variable “Would you buy a remanufactured
product?” and the value “1” to the “no” answers. Hence, the results are interpreted with respect to these
values in the following section.

4.0 RESULTS AND DISCUSSION

The model analyzed in this study is a logistics regression model that is designed to predict whether
consumers purchase the remanufactured products with respect to the factors influencing the process.
Hence, the model is acceptable as the overall significance level of this model is below 0.05. As shown in
Table 3, chi-square value for the model is 77.889. Besides, the significance level determined from Hosmer
and Lemeshow Tests – which shows the goodness of fit - being close to 1 supports the feasibility of the
model (Table 4).

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Table 3: Omnibus Tests of Model Coefficients

Chi-square df Sig.
Step 1 Step 77.889 13 .000
Block 77.889 13 .000
Model 77.889 13 .000

Table 4: Hosmer and Lemeshow Test

Step Chi-square df Sig.
1 6.038 8 .643

Table 5 demonstrates the predictions of the model with respect to logistics regression analysis.
Accordingly, the average prediction of the proposed model is 70%. In other words, the proposed model
can make 70% correct predictions of consumer purchase decision of remanufactured products.

Table 5: Classification table

Observed Predicted
Depended Variable Percentage
Yes No Correct
Step 1 Depended Yes 206 32 86.6
Variable No 89 73 46.1
Overall Percentage 70.0

Table 6 depicts that, with respect to consumer preferences of remanufactured products, all independent
variables reckoned in the model have no effect on the dependent variable, whatsoever. In prediction of
the dependent variable, six independent variables have a significance level below 0,05%: low prices
(LOWP), the product being used (UPRO), information on previous condition (PCON), company reliability
(CREL), product promotion (PROM), background of problems with the product (BPRO). Thus, it is not
possible to use the remaining independent variables above 10% significance level. According to logistics
regression results, six hypotheses are accepted (H1, H5, H6, H10, H12, H13) in consideration of their
significance levels. We reject the remained seven hypotheses (H2, H3, H4, H7, H8, H9, H11) in
consideration of their significance levels.

Table 6: Variables in the equation

Variables β S.E. Wald df Sig. Exp(B)
LOWP -.382 .131 8.507 1 .004 .682
WDIS -.237 .159 2.225 1 .136 .789
BRIM .013 .143 .008 1 .927 1.013
PERQ -.161 .152 1.116 1 .291 .852
UPRO .278 .126 4.861 1 .027 1.321
PCON .315 .158 3.969 1 .046 1.370
PEXP .027 .167 .026 1 .873 1.027
TYPE .017 .132 .017 1 .896 1.017
LEHA -.069 .114 .366 1 .545 .933
CREL -.328 .166 3.906 1 .048 .720
SPER .060 .108 .310 1 .577 1.062
PROM -.336 .126 7.168 1 .007 .714
BPRO .317 .144 4.835 1 .028 1.373
Constant 1.161 .798 2.120 1 .145 3.194

Moreover, their Wald value being above 2, all independent variables used in prediction of the dependent
variable are determined to have an influence on the model. The value of β informs decision maker about
the influence direction of the factor. So, with respect to the β value of the low price (LOWP), one may
interpret that consumer’s purchase decision regarding a remanufactured product may differ in each
purchase. In this model, the product being used (UPRO) has a negative influence on the consumer
purchase decision regarding a manufactured product. Likewise, information on previous condition
(PCON) changes consumer purchase decision from yes to no. Company reliability (CREL) as well as

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product promotion (PROM) changes consumer behavior from no purchase to purchase. Finally,
background of problems with the product (BPRO) changes consumer behavior from purchase to no
purchase.

The result of logistics regression reveal that the dependent variable of the model is predictable with
respect to six independent variables. Accordingly, we reconstruct the proposed model with respect to
these six independent variables and reanalyze it by using the logistics regression method. Similar to the
previous analysis, the significance level of the model using only six independent variables is determined
to be below 0.05% (Table 7). Thus, the value inferred in Hosmer and Lemeshow Test is 0.754 – which is
closer to 1 than the previous value (Table 8).

Table 7: Omnibus tests of model coefficients

Chi-square df Sig.
Step 1 Step 72.578 6 .000
Block 72.578 6 .000
Model 72.578 6 .000

Table 8: Hosmer and Lemeshow test

Step Chi-square df Sig.
1 5.030 8 .754

According to Table 9, all independent variables used in the new regression analysis meet the 0.05%
significance level requirement. Similarly, compared to the previous one, there is a noteworthy increase
in Wald values of all independent variables. The β values of independent variables also signify a certain
increase than that of the previous analysis. In fact, such an increase points out independent variables
being more influential on the prediction of the dependent variable. Consequently, the logistics regression
analysis reveals several important results for consumer behavior regarding purchasing remanufactured
products. First, merely six of the initially identified 13 independent variables are able to render 0.05%
significance level. Second, low prices (LOWP), company reliability (CREL), and product promotion
(PROM) changes consumer behavior from previous no purchase decision to purchase. Finally, the
product being used (UPRO), information on previous condition (PCON), and background of problems
with the remanufactured product (BPRO) have a negative effect over consumer behavior from purchase
to no purchase decision.

Table 9: Variables in the Equation

Variables B S.E. Wald df Sig. Exp(B)
LOWP -.503 .116 18.907 1 .000 .605
UPRO .250 .122 4.199 1 .040 1.285
PCON .269 .148 3.285 1 .070 1.308
CREL -.426 .147 8.427 1 .004 .653
PROM -.340 .120 8.012 1 .005 .712
BPRO .310 .140 4.899 1 .027 1.364
Constant .957 .727 1.729 1 .189 2.603

5.0 CONCLUSION

In recent years, many companies (especially OEMs) are compelled to collect return products as to strict
take-back laws, scarce resources, and environmentally concerned consumers. Remanufacturing is a
widely used method in eliminating waste and scraps as well as utilizing returned products, while
triggering new marketing opportunities. Thus, purchase behavior of consumer for remanufactured
products is a rarely studied topic in the marketing literature.

This study focuses on proposing a new model to project consumers’ purchase decision for
remanufactured products. We design a questionnaire to identify the factors acting upon purchase
decisions of consumers’ – both yes and no – regarding such products; hence, logistics regression model

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is used in their analysis. In proposed model, the dependent variable is consumers’ decision, while the
independent variables are the effective factors over consumer behavior. The analysis reveals that low
prices, warranty disclaimer, the product being used, information on previous condition, company
reliability, product promotion and background of problems with the product are the main and the most
influential factors in consumers’ decision process of remanufactured products. On one hand, low prices,
warranty disclaimer, company reliability and product promotion are the factors to induce purchasing
remanufactured products. On the other hand, the product being used, information on previous
condition, background of problems with the remanufactured product stand as the factors leading to no
purchase of such products.

It is always possible to repeat this study through classifying the remanufactured products by sector.
Consumers’ expectation on product lines as well as their benefits may differ from group to group.
Likewise, consumers’ perception of remanufactured products may also vary for separate product lines.
Thus, distinction by sector or by product may reveal different results in further studies. Moreover,
personal traits of consumers (i.e., demographic, psychographic, behavioral) have a potential to influence
purchasing decision. Therefore, focusing on such personal traits in further studies may entail progressive
results, as well.

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